Which of the Following Is Not a Criterion Typically Used

question 29

Multiple Choice

Which of the following is not a criterion typically used to allocate indirect fixed costs?

• A)Ability to bear costs
• B)Equity
• C)Feasible outcomes
• D)Relative benefits

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Definitions:

Monthly Fixed Expense

Expenses that do not change month to month, regardless of business activity, such as rent or salaries.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, represented as a percentage.

Fixed Monthly Expenses

Costs that do not vary from month to month, such as rent, insurance, and salaries.

Unit Variable Cost

The cost associated with producing an additional unit of product, which includes materials, labor, and any other expenses that increase with each unit produced.